2701 Overview

This chapter establishes the Department of Veterans Affairs’ (VA) financial policies for the obligation of legacy enhanced-use lease (EUL) payments.

Key points covered in this chapter:

• VA legacy EULs, established prior to 2012, have legislative authority to make payments for rent, insurance, and utility payments in accordance with 38 U.S.C. §§ 8161-8169; and
• Commercial vendors must be individually vendorized. The use of a miscellaneous vendor code is not permitted for legacy EUL obligations.

2702 Revisions

Section	Revision	Office	Reason for Change	Effective Date
Various	New policy	OFP	Reorganized obligation chapters layout	August 2026

2703 Definitions

Enhanced-Use Lease (EUL) – A negotiated lease agreement for up to 99 years between the Department and another entity to lease VA unused or underutilized owned real property to an entity to finance, develop, operate, and maintain property for the purpose as provided for in 38 U.S.C. § 8162.

Legacy Enhanced-Use Lease (EUL) – An EUL, established prior to the 2012 amendment of 38 U.S.C. § 8162, where VA has the authority to lease non-VA property to support Veteran services, make underutilized VA property available under a lease to organizations working to serve the VA mission, lease back space, receive in-kind consideration, and make related payments to lessees.

Non-Contractual Obligation – This term encompasses obligations with special statutory authority or other regulatory authority to exempt the obligation from Federal Acquisition Regulations (FAR). There are instances where these obligations may be generally defined as a contract (agreement between two parties), but these obligations do not follow FAR-based procedures.

Obligation – A legally binding agreement that will result in outlays, immediately or in the future. An obligation is a legal liability of the Government against an available appropriation.

2704 Roles and Responsibilities

Administration and Staff Office Chief Financial Officers (CFOs) are responsible for ensuring the proper processing of legacy EUL payments in accordance with the guidelines in this policy.

2705 Policies

270501 General Policies

1. Prior to 2012, VA had the authority in accordance with 38 U.S.C. §§ 8161-8169 to enter agreements to lease non-VA property to support Veteran services (e.g., to house homeless Veterans), as well as to make underutilized VA property available under a lease to organizations working to serve VA’s mission. VA has continuing legacy legislative authority to make payments on these leases to the lessee for rent, insurance, and utility payments.
2. In accordance with 38 U.S.C. § 8162, VA may make payments from funds appropriated to the Department for the purposes of the legacy EUL and these payments therefore are not subject to Federal Acquisition Regulation (FAR).
3. An obligation will be recorded on October 1^st for the full amount of the lease to be incurred during the fiscal year. If a legacy EUL will end prior to September 30^th, the period of performance for the obligation would be October 1^st through the end date of the lease.
4. Documentation required for legacy EUL obligations includes a copy of the EUL agreement and any other associated contract between the two parties.
5. Legacy EUL obligations will be issued and recorded in VA’s accounting systems to a specific vendor; the use of “Miscellaneous Vendor” is not permitted.
6. For additional information on VA lease of real property as lessor/owner, see Volume V, Chapter 12 – Accounting for Enhanced-Use Leases.
7. Obligations pursuant to this policy must follow the requirements for all Government obligations, established in Volume III, Chapter 2 – Obligations.

270502 Integrated Financial and Acquisitions Management System (iFAMS)

1. When recording a legacy EUL obligation, in iFAMS, document type OSE (Standard Obligation (non-acquisitions obligation)) must be used.
2. When making a payment for legacy EUL transactions, in iFAMS, a PAI (Invoice Payment Processing System (IPPS) Standard Payment) will be used as the payment document type for IPPS payment. PAE will be used as the payment document type for a manual payment.

270503 Financial Management System (FMS)

1. When recording a legacy EUL obligation, in FMS, VA Form 1358 approved use / authority code “20” and sub-authority “A” must be used.
2. Payment for a legacy EUL transaction, in FMS, will be made via EFT following the standard process for submitting an invoice.

2706 Authorities and References

• United States Code (U.S.C.)
  • 38 U.S.C. §§ 8161-8169, Enhanced-Use Leases of Real Property
• VA Financial Policy Publications
  • Volume III, Chapter 2 – Obligations
  • Volume V, Chapter 12 – Accounting for Enhanced-Use Leases
• VA Form 1358 Obligation or Change in Obligation

2707 Rescissions

None.

Appendix A: Previous Policy Revisions

None.